Columbia Clay, Inc. issues 1.18 million shares of preferred stock with a par value of $11.00 at its market price of $35.00 per share. The issuance should be recorded with a debit to Cash for:Multiple Choice $28.32 million, a credit to Additional Paid-in Capital for $12.98 million, and a credit to Preferred Stock for $41.30 million. $41.30 million, a credit to Preferred Stock for $12.98 million, and a credit to Additional Paid-in Capital for $28.32 million. $41.30 million and a credit to Preferred Stock for $41.30 million. $12.98 million and a credit to Preferred Stock for $12.98 million.

It is pertinent to note that when preferred stock is issued at a premium then the journal entry…

Answered: Columbia Clay, Inc. issues 1.18 million…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Columbia Clay, Inc. issues 1.18 million shares of preferred stock with a par value of $11.00 at its market price of $35.00 per share. The issuance should be recorded with a debit to Cash for:

Multiple Choice

$28.32 million, a credit to Additional Paid-in Capital for $12.98 million, and a credit to Preferred Stock for $41.30 million.
$41.30 million, a credit to Preferred Stock for $12.98 million, and a credit to Additional Paid-in Capital for $28.32 million.
$41.30 million and a credit to Preferred Stock for $41.30 million.
$12.98 million and a credit to Preferred Stock for $12.98 million.

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